National Prices Fall 18%, New York Further to Go
Along with yesterday’s headline that houses in the nation’s 20 largest cities fell an average of 18 percent year-over-year in October was the news that single-family homes in the New York metropolitan area declined a more modest 7.5 percent. (The 20-city index has now fallen more than 23 percent since its July 2006 peak.) Reason…
Along with yesterday’s headline that houses in the nation’s 20 largest cities fell an average of 18 percent year-over-year in October was the news that single-family homes in the New York metropolitan area declined a more modest 7.5 percent. (The 20-city index has now fallen more than 23 percent since its July 2006 peak.) Reason to cheer? Not exactly, says the Wall Street Journal:
Markets where price declines have been slightest may be in worse shape, because prices still have further to fall before enough buyers step in to bring housing activity to normal. Meanwhile, heavy foreclosure activity in hard-hit areas like Phoenix, Las Vegas and San Diego are bringing prices into equilibrium. Those cities may be closer to a turnaround…In the language of Wall Street, with asking prices not dropping to levels where bidders will pick them, the market isn’t “clearing.”
The Journal article goes on to say that New York City’s slower decline resembles past patterns: It took three years between 1988 and 1991 for prices to fall just 15 percent. This go-round, “the price decline may be far more severe,” the article predicts. “Right now, people are still living on last year’s bonus,” says Barclays Capital economist Ethan Harris, who is based in New York. “You can sort of feel the local economy on the edge of a cliff.”
New York, Boston Prices Expected to Fall Further [WSJ – Sub]
Home Prices Fell at Their Sharpest Pace in October [NY Times]
Local Home Prices Fall 7.5% [NY Post]
Prodigal Son…
“The problem with socialism is that you
eventually run out of other peoples’
money.’ Margaret Thatcher
For Rob and others not familiar with the compensation scheme for Wall Street employees and others who “live off their bonuses”, it’s simply a situation where you have an annual compensation made up of a base salaray (which remains relatively fixed until you reach quite senior levels of management) and a bonus based on your, and your company’s, annual performance. Unless it is a bad year for the company or you, the rule of thumb would be that you could expect at least the same level of bonus as the previous year. Staying flat from year to year or getting a lower amount is a hint that your not valued and on your way out, unless the overall compensation pool is down as it is now.
So when you hear about these Wall Street employees fretting about their bonuses, what they are fretting about is a drop in their normal annual compensation. Salaries (until you reach senior levels of management) are gennerally capped at $150K to $200K, with the remainder of your compensation being paid in the form of a bonus. So when you hear about someone making 400K, a good chunk of it is paid in the form of a bonus. When you hear that bonuses are down 50%, then that $400K total comp drops to less than $300K, which is a big drop, so you can imagine the follow on effects for the economy.
“Finance people contribute to society”.
Agreed, they give us usury, corruption, wars and materialism.
Go finance!
Well, sometimes they do. Maybe not as much as a doorman though.
“Finance people contribute to society”
I’m laughing so hard!!!!
I’m tickled by this for my own amusement.
But the ones that get the $300,000 – $2MM bonuses have spent them already thinking they’d get another one this year!!! Ooopppsss.
One needs to remember that for many, bonuses are in the millions. Anyone could live off a few of those for the rest of their lives. Top people got 40, 50, 100 million dollars or more. If I got a 40 million dollar bonus in 2007, would I be worried now? I don’t think so.
“Many many NYCers who have nothing to do with Wall St. also live on bonuses, especially those in sales, marketing, advertising, even food and retail.”
Although people outside of finance may earn year-end bonuses, they do not “live on bonuses” since non-finance bonuses are typically a small percentage of annual compensation. A free turkey at a Christmas is a bonus. Living on a bonus is a Wall Street thing.
“i dont think people should get millions of free dollars for pushing papers.”
They do more than push paper for those big dollars.
Finance people contribute to society by making sure that resources are allocated to their most efficient uses and not wasted on things like, say, internet bubbles or speculative housing markets.
There’s a concentration of talen in NYC? Who knew? People get year-end bonuses? Unheard of!